Taxing Takeway

The tax system is a political fiction. Think of the U.S. (or any government’s money pot) treasury (where the treasure is kept) as a bucket. Around that bucket, at the bottom rim, are a bunch of holes. Money is water in the bucket. Fill the bucket to the top and water comes dripping, dribbling or flowing out of the holes around the bottom rim.

Each drip, dribble or water stream out of the bucket is cash flow. It goes as determined by some governmental (ruling) agency (whether it’s thought of as an agency supporting capitalism, socialism or plan corruption). The stuff flows into little cups. You can call them banks, which in turn determines who get the water and allocates how much of the money goes directly or indirectly to businesses or people. The businesses or people are supposed to use the water which then flows to others who are providing goods or services to meet the needs of people. A little bit is put back into the big bucket at the top to keep it flush with $$$.

Ultimately, the big bucket at the top must be, somehow, replenished. Otherwise, the common wealth dries up. That’s what taxes are supposed to do: refill the big bucket. Obviously, to keep the outflow going, you’ve got to put waster in the top bucket.

That’s the system, in a nutshell.

The zero sum game, therefore, is simply to put more in than is going out, regardless of anything. At least that will hold the water level in the bucket at a constant mark.

Alas, there’s been more going out than is coming in. So, to solve the problem, the Republican administration feels the best way is to put in less. That way, there will be more stuff made or services rendered to people and, hence, more tax revenue raised. That seems logical. And, it’s easier said than done!

I’m no accountant. However, I’ve heard that the fastest route to bankruptcy is to cut the price (and profit) and make up the short fall with volume. Thinking about it like that, it seems to me that the fastest way to economic collapse is to cut taxes with the (assumed hope) that increased economic activity will generate more business, more cash flow and, thus, more tax revenues.

Can someone explain how decreasing corporate taxes will result in more income to individuals, when — in fact — businesses are more profitable now and wages have simply not kept up with the cost of living.

Smoke and mirrors, that’s what they say: the illusion of political rhetoric every day.